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A year after Brexit, Frankfurt emerges as biggest banking winner

Frankfurt is emerging as the biggest winner from last year's Brexit vote, with many of the world's biggest banks choosing to base their new European Union headquarters in the German city.

PHOTO: REUTERS

[LONDON]Frankfurt is emerging as the biggest winner from last year's Brexit vote, with many of the world's biggest banks choosing to base their new European Union headquarters in the German city.

Standard Chartered Plc, Nomura Holdings Inc and Daiwa Securities Group Inc have picked Germany's financial capital for their EU base to ensure continued access to the single market. Citigroup Inc., Goldman Sachs Group Inc and Morgan Stanley are weighing a similar decision, said people familiar with the matter, asking not to be named because the plans aren't public.

"Frankfurt is well-positioned to receive foreign banks," said Stefan Winter, chairman of the Association of Foreign Banks in Germany and head of UBS Group AG's investment bank in the country. "It's in the heart of Europe, has fantastic infrastructure and affordable office rents." Frankfurt is a natural pick given a financial ecosystem featuring Deutsche Bank AG, the European Central Bank and BaFin, seen by many as the only regulator outside of London capable of handling the banks' complicated derivatives business. Even as prospects for a UK deal maintaining some sort of access to the single market gain traction, banks are still preparing for the worst and want to have new or expanded offices up and running inside the bloc before the UK formally departs in 2019. London could lose 10,000 banking jobs and 20,000 roles in financial services as clients move 1.8 trillion euros (S$2.79 trillion) of assets out of the UK after Brexit, according to think-tank Bruegel. Other estimates range from as many as 232,000 jobs to as few as 4,000. Bloomberg News conducted interviews and reviewed public statements to discover what each major bank is planning.

Bank of America views Ireland's capital as its default destination for a new EU hub if the UK loses easy access to the single market, one of the firm's top executives in Germany said in March.

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The bank will likely move some jobs to other cities across the region, including Frankfurt, Madrid, Luxembourg and Amsterdam, said Nikolaus Naerger, Bank of America's head of corporate banking in Germany, Switzerland and Austria. No final decisions have been made.

"You've got to get your legal entity structure correct so you can operate in two different environments: one inside the UK and one outside," Bank of America President Brian Moynihan said in Davos, Switzerland, in January. "We already have a lot of that structure set up. Then you have to start to think about where locations are."

The Wall Street firm plans to more than double its number of staff in Frankfurt to 400 as it begins withdrawing personnel from London, the firm's vice chairman of the international business Richard Gnodde told Frankfurter Allgemeine Sonntagszeitung.

The firm is scouting for office space in Frankfurt that could serve as its new trading hub inside the EU and could ultimately move as many as 1,000 employees to the city, including traders and senior managers, according to a person familiar with the matter. Goldman Sachs plans to start moving client-facing staff to various EU cities next year, Mr Gnodde said in April.